In June 2001, president George W Bush signed into law one of the most sweeping changes in US tax history. More than a decade later the cuts are being blamed for the collapse of bipartisan talks aimed at tackling the debt mountain the built up in the decade that followed.

The Bush-era tax cuts are set to expire at the end of next year and have proved to be the kryptonite that defeated a bi-partisan "supercommittee" set up to find ways to tackle the US's $15tn deficit. Republicans dug in against any agreement that did not extend current income-tax rates, Democrats held out for higher rates on families with taxable income over $250,000 a year.

Away from Washington the senior economists – and even some senior Republicans - seem to agree that a compromise was needed and that the tax cuts had done more harm than good.

"This is going to be the big debate for 2012," said Simon Johnson, professor of entrepreneurship at MIT's Sloan School of Management and former chief economist of the International Monetary Fund (IMF).

The tax cuts were "inappropriate, excessive and irresponsible," he said. "Cutting taxes when you are going to war is a pretty silly thing to do," he said. "They were based on extremely optimistic projections that turned out not to be correct. If you don't extend them, the amount of additional cuts you need to make to reach a sustainable debt level are pretty small. If you do extend them, make them permanent, you are looking at a very big adjustment."

In a recent report the non-partisan Center on Budget and Policy Priorities concluded government spending under president Barack Obama was not the prime reason for today's massive deficit. "The fact remains, the economic downturn, president Bush's tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years," the center concluded.

Nor have the tax cuts benefited most Americans. According to its calculations the cuts put an average of $860 in tax benefits the pockets of people earning between $40,000 and $50,000, a 2.2% increase. For those earning over a $1m the benefit was $128,832, a 6.2% increase.

The center concluded that the Bush-era tax cuts did not spur economic growth and had made a significant contribution to the deficit. Scrapping the tax cuts for the wealthy alone would be enough to make up for the shortfall in social security; scrapping them entirely would halt the rise in the national debt over the next decade.

Even some prominent Republicans have come out against the controversial taxes. If anything, New York mayor Mike Bloomberg has been more radical than the Democrats. "All income groups have to be part of the solution," the mayor said in a speech in Washington last month. "Allow the Bush tax cuts to expire at the end of 2012, not just for high-income workers as the president has proposed, but for all tax brackets."

Bloomberg said the debt crisis may best be tamed through a combination of taxes and reduced spending on health care and social security like the one outlined by President Obama's fiscal commission headed by former senator Alan Simpson, a Republican, and Erskine Bowles, once Clinton's White House chief of staff.

"The spending cuts in Simpson-Bowles, plus Clinton-era tax rates, plus closing some tax loopholes and ending wasteful subsidies would save $8tn and effectively bring our budget into balance by 2021," Bloomberg said. Even former Federal Reserve chairman Alan Greenspan has come out for allowing the tax cuts to expire.

But for others the idea of increasing taxes in an economy still in the early stages of recovery is anathema. "The problem is that we are spending way too much, not that we are taxing too little," said Curtis Dubay, senior tax policy analyst at conservative think tank The Heritage Foundation. "We need to change the size and scope of the federal government. We have been overspending for a decade and have seen a hyperbolic increase in the last two or three years. We have to decide if we want to go down the European route of a generous welfare safety net and higher taxes or a return to a less generous one that has inspires self reliance."

Dubay said cutting tax breaks for those earning over $250,000 would have a minimal impact on the deficit, adding up to $750bn over 10 years. "The math doesn't add up," he said.

Ten years ago the Heritage Foundation claimed the Bush tax cuts would eliminate the deficit by 2010. A lot has changed in the interim, said Dubay, and the report was written before September 11, the wars in Iraq and Afghanistan and the recession. But he said one thing was the same: it was a bad idea to raise taxes in an ailing economy.

Johnson could not disagree more: "The thing about taxes is, they are your 20-year future. When the markets stop beating up on Europe, I am confident they will turn their attention to us," he said.